Correlation Between Core Alternative and Global X

Can any of the company-specific risk be diversified away by investing in both Core Alternative and Global X at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Core Alternative and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Core Alternative ETF and Global X SP, you can compare the effects of market volatilities on Core Alternative and Global X and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Core Alternative with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Alternative and Global X.

Diversification Opportunities for Core Alternative and Global X

-0.33

Correlation Coefficient

Core Alternative  Global X

Very good diversification

The 3 months correlation between Core and Global is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Core Alternative ETF and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and Core Alternative is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Core Alternative ETF are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SP has no effect on the direction of Core Alternative i.e., Core Alternative and Global X go up and down completely randomly.

Pair Corralation between Core Alternative and Global X

Given the investment horizon of 90 days Core Alternative ETF is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, Core Alternative ETF is 1.53 times less risky than Global X. The etf trades about -0.27 of its potential returns per unit of risk. The Global X SP is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,839  in Global X SP on October 11, 2024 and sell it today you would lose (60.00) from holding Global X SP or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Core Alternative ETF  vs.  Global X SP

Core Alternative ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Alternative ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Global X SP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Global X is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Core Alternative and Global X

The main advantage of trading using opposite Core Alternative and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Alternative position performs unexpectedly, Global X can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Global X will offset losses from the drop in Global X's long position.

The idea behind Core Alternative ETF and Global X SP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.